In De Vrije Markt on Friday, November 20th 2015, host Lieven Verstraete and managing director of Belofloripa, Grace Keli de Aguilar Gomes, took a closer look at the current economic situation in Brazil. Which conclusions did they draw and which opportunities were highlighted? The show also addressed the mission to Brazil, led by Minister Ben Weyts. The latter describes the country in one word as “potential”.
It would be pretty idiotic…
During the economic mission to Brazil and Chili, led by Flemish Minister of mobility Ben Weyts, the latter described Brazil as: “In one word: potential. I think we have a lot of opportunities here”. Not suprisingly, Brazil and Chili are real growth markets for Flanders and according to the Minister, it would be pretty idiotic if we do not approach them as a united Flemish front. Managing director of Belofloripa, Grace Keli de Aguilar Gomes, was also present. Moreover, she was invited by Lieven Verstraete, reporter from Één, to analyze the current economic situation in Brazil from her perspective as an expert on internationalization and as a specialist on Brazil in an episode of de Vrije Markt available on the website of De Redactie (watch here).
Growth sectors
One cannot deny that the general economic growth in Brazil does no longer show the mindblowing percentages of the previous years, with an absolute high of 7,6% in 2010. Those numbers are impressive, even more when we compare them to the European and Belgian growth numbers. For instance, the average growth in the last ten years was 3,4% in Brazil, while in Europe it was 0,96% and in Belgium 1,24%. Grace Keli de Aguilar Gomes mentions that, even though the growth of the Brazilian market slowed in 2015, certain sectors are still growing and the numbers are remarkable. Last month, it was announced that the 5th largest maritime container transporter worldwide, Hapag-Lloyd, will increase its capacity in Brazil with a staggering 5% in 2016. Furthermore, the Brazilian ports will have grown 4,8% in comparison to 2014.
Below, you can find a number of sectors that are still booming in Brazil:
E-commerce & Software
According to Romero Rodrigues, founder of Buscapé (the largest Latin American price comparing website), it is the ideal moment to invest in digital startups.
Cleantech
Ethanol: Companies such as Cargill and Odebrecht are investing in the growing ethanol sector. When comparing the numbers of commercialized ethanol with those of the last harvest in the same period, a growth of 25,36% can be observed. Considering the current numbers, Brazil will probably end 2015 as the second highest producer of biofuels, following the U.S. and surpassing Germany.
Renewable Energy: The state of Góias has announced that they will invest in solar energy at the beginning of last month. At the moment, solar energy makes up about 0,02% of the total energy production in Brazil. It is predicted that this will be 4% by 2024.
The Brazilian Investment Bank BNDS announced that they – in collaboration with other parties – will invest almost 500 million Reais in windfarms in the state of Bahia. In the state of Pernambuco, more than 800 miljoen Reais was invested, under the supervision of Casa dos Ventos.
Last month, the Inter-American Development Bank (IDB), in cooperation with Bloomberg New Energy Finance, published the results of their analysis of the renewable energy activities in 2015 of 55 developing countries. Brazil finished in second place as most attractive country to invest in renewable energy, following China. This mainly thanks to the investments in windfarms, making Brazil the 10th largest wind energy producer in the world.
Even Flemish companies are benefiting from this blooming sector. Companies such as Keppel Segers and Vyncke have invested in the country – the latter even established a company in the country – and as a result, they are were able to achieve large projects in waste management and biomass, respectively.
Ideal moment for investments
There are also investments in other sectors:
Shopping Malls: Carrefour will develop a new mall in São Paulo
Paper & cellulose: The company Suzano will invest more than 1,6 billion Reais in the following weeks to expand their production
Hospitals: The private-equity group Carlyle is investing 1,75 billion Reais in a Brazilian hospital chain
Clovis Meurer, CEO of CRP Companhia de Participações, gives an explanation: “In times of crisis, the government will usually invest less in various economic sectors, which creates space for private initiatives that can fill the void”. As has been said in de Vrije Markt, this is the ideal moment to (wisely) invest and buy shares in companies, because “Brazil is on sale”.
Economic crisis or identity crisis?
Being an expert on Brazil, Grace Keli explained during the interview that the current crisis in Brazil is not as much linked to an economic crisis, as to an identity crisis in which the people react to the corruption scandals and the weak position of president Dilma Rousseff. This was confirmed once more on Thursday, December 3rd, when the request for impeachment was approved by the head of parliament. Political issues will always have an effect on the economy, nevertheless, entrepreneurs consider the possible impeachment as something positive. This became clear immediately by the closing of the stock exchange with a profit of 3,29% on that particular Thursday. Furthermore, entrepreneurs and managers are optimistic that – after going through the procedure of a possible impeachment – the political deadlock can be undone and the economy can florish once more. They hope that this chapter can be closed as soon as possible, so that the economy can continue to develop once more.